CANADA FX DEBT-C$ at 13-week high against greenback

* C$ rises to 98.80 U.S. cents

* Bonds nearly flat

TORONTO, Aug 5 (Reuters) - Canada’s dollar hit a 13-week high against the U.S. dollar on Thursday, spurred by possible merger and acquisition-related flows and a more positive mood in the markets ahead of key North American jobs reports on Friday.

The Canadian dollar CAD=D4 had been rangebound between C$1.02 and C$1.07 since last October, except for a brief foray to parity in April and a few slides into C$1.08 territory.

Overnight, the currency pushed through a key barrier, hitting its strongest point against the greenback since mid-May.

“We’re seeing a combination of generally positive risk back ground , which is supportive of CAD, and speculation on potential M&A inflow into Canada,” Adam Cole, head currency strategist at RBC Capital Markets in London, said of the move.

An ADP report on Wednesday showed that the U.S. companies added 42,000 jobs in July. That was coupled with some positive U.S. service sector data, helping ease some fears about the health of the world’s biggest economy, which absorbs around three-quarters of all Canadian exports.

At 8:05 a.m. (1205 GMT), the Canadian dollar was at C$1.0121 to the U.S. dollar, or 98.80 U.S. cents. That compared with C$1.0176 to the U.S. dollar, or 98.27 U.S. cents, at Wednesday’s close.

Cole said that investors focus will now be on the more comprehensive U.S. government jobs report on Friday, and the Canadian employment data that comes out just before it.

In the meantime, there may be some volatility in the Canadian dollar, he said.

“Markets do tend to be dominated by squaring of positions and shuffling around ahead of the payrolls numbers.”

“I suspect it will go quite rangy between now and then as markets settle down and anticipate those numbers. Everything hinges on those releases, basically.”

U.S. private-sector payrolls are seen rising a modest 90,000 in Friday’s data, and the unemployment rate is expected to climb to 9.6 percent, from 9.5 percent in June. [ECI/US]

In Canada, forecasters are expecting a gain of 15,000 jobs and a steady unemployment rate at 7.9 percent. [ID:nN30270191]


Canadian government bond prices were nearly flat after falling hard following Wednesday’s U.S. economic data.

The two-year bond CA2YT=RR was down 1 Canadian cent at 100.93, to yield 1.541 percent, while the 10-year bond CA10YT=RR was up 2 Canadian cents at 102.80, to yield 3.165 percent. (Reporting by John McCrank; Editing by Theodore d'Afflisio)